Most Asian currencies edged up against the dollar on Monday, shrugging off threats from a ransomware attack that locked up more than 200,000 computers in more than 150 countries, and a missile test by North Korea. The weekend cyber attack, which slowed down after a security researcher stumbled on a way to at least temporarily limit the worm’s spread, was expected to speed up on Monday when employees returning to work turned on their computers.
But with little evidence of widespread disruption in the region on Monday, markets appeared unalarmed, at least for now. North Korea said it had successfully tested a new mid-to-long range missile on Sunday aimed at verifying its capability to carry a “large scale heavy nuclear warhead.” The missile landed in the sea 97 km (60 miles) south of Russia.
South Korea’s military said it needs further analysis on the North’s claim of technical advancement. It saw the possibility of North Korea mastering missile re-entry technology as low. The Korean won strengthened 0.3 percent against the dollar. “Admittedly, risks of imminent confrontation are not elevated, but this is nevertheless a reminder that geo-political risks continue to linger in the background,” Mizuho Bank said in a note.
Gains across the emerging markets were underpinned by a weak dollar after U.S. economic data came in shy of expectations. U.S. sales data posted a smaller-than-expected 0.4 percent increase in April from March, while a disappointing consumer prices report raised concerns about the vigour of the retail sector and the broader economy.
You may like to watch:
Sentiment across some of the Asian currencies was also boosted by oil prices, which jumped after Saudi Arabia’s energy minister and Russia’s oil minister said in a joint briefing that they agreed output cuts should be extended until March 2018. The Malaysian ringgit gained 0.3 percent against the dollar. Oil price gains favour the currencies of oil exporters such as Malaysia.
The currency also benefited from the Malaysian central bank statement in which said it expected growth momentum from the second half of 2016 to strengthen in the first quarter of 2017, and to be sustained for the rest of the year. “We concur with Bank Negara Malaysia that growth momentum should tick higher,” Julia Goh, economist at UOB, said in a note. The Thai baht climbed 0.3 percent after news the economy expanded in the first quarter at its fastest quarterly rate in four years, boosted by recovering exports.
The Chinese yuan edged marginally lower on Monday following weaker-than-expected April activity indicators, bucking the trend across emerging market currencies in Asia. China’s factory output and fixed asset investment growth cooled more than expected in April, adding to signs that momentum is slowing from a strong start in the first quarter.
Factory output rose 6.5 percent in April from a year earlier, while fixed-asset investment grew 8.9 percent in the first four months of the year, both below expectations. China’s fiscal spending rose 3.8 percent in April from a year earlier, slowing sharply from a 25.4 percent jump in March.
The Indian rupee rose 0.3 percent on Monday on news that India’s consumer inflation eased in April to its lowest in at least five years. Consumer prices rose by an annual 2.99 percent, compared with March’s 3.89 percent, data released by the Ministry of Statistics showed on Friday.
India’s improving inflation performance has pushed real interest rates – the amount by which they exceed inflation – strongly into positive territory. That has attracted buyers to the bond market and driven stocks to double-digit percentage gains in the year to date.
Sentiment was also boosted news India’s foreign exchange reserves rising to $375.72 billion as of May 5 from $372.73 billion a week earlier. The following table shows rates for Asian currencies against the dollar at 0623 GMT.